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Labour and Employment

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United Arab Emirates - Clyde & Co LLP
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Employment relationships in the United Arab Emirates (UAE) are governed and regulated by the UAE Labour Law (33/2021) which is supplemented by UAE Cabinet Resolution 1/2022 (Executive Regulations).

The UAE Labour Law applies to all companies and employees in the private sector in the United Arab Emirates, including its free zones; save for the Dubai International Financial Centre and the Abu Dhabi Global Market, both of which implement their own employment laws.

The UAE Ministry of Human Resources and Emiratisation (MoHRE) also frequently issues resolutions and decisions which affect those employers and employees across the private sector in the UAE falling under the jurisdiction of the MoHRE.

United Arab Emirates - Clyde & Co LLP
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All employees in the United Arab Emirates must enter into a written employment contract.

Where an employee is employed by a company registered with the MoHRE, the employee must enter into a dual-language (Arabic/English) employment contract in a form prescribed by the MoHRE (MoHRE employment contract).

Similarly, some free zones require employees to enter into a dual-language (Arabic/English) employment contract in a form prescribed by the relevant free zone authority (free zone employment contract).

The MoHRE employment contract and the free zone employment contract contain only basic information and cannot be materially amended. It is therefore common for UAE employers to implement an additional English language company employment contract (company employment contract), which contains additional and more sophisticated terms and conditions – for example, provisions relating to:

  • duties;
  • bonuses;
  • incentive arrangements;
  • confidentiality; and
  • obligations before and after the termination of employment.

While the MoHRE employment contract and the free zone employment contract are typically recognised by the UAE labour courts as the operative employment contract, the terms of a company employment contract will be enforceable as long as they do not seek to exclude the minimum rights or entitlements afforded by the UAE Labour Law and supplemental Executive Regulations.

Where there is a discrepancy between the terms of two employment contracts, a UAE labour court will typically apply the term which is more beneficial to the employee.

United Arab Emirates - Clyde & Co LLP
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All employees in the United Arab Emirates must enter into a written employment contract.

Whilst all employees must be employed on fixed-term employment contracts, the Labour Law does not prescribe a maximum or minimum term. Employment contracts may be renewed on expiry, either expressly or – if the parties simply continue to perform the employment contract – automatically.

The UAE labour courts typically place sole reliance on express written contractual terms and do not normally imply terms into employment contracts.

The UAE Labour Law states that employment contracts must include:

  • the name and address of the employer;
  • the name of the employee;
  • the employee’s nationality;
  • the employee’s date of birth;
  • the term of the contract;
  • the role or job title;
  • the commencement date;
  • the place of work;
  • working hours;
  • rest days;
  • any probationary period;
  • annual leave;
  • wages (including benefits and allowances); and
  • the notice period and termination procedure.

In practice, the inclusion of some of these particulars (eg, the employee’s nationality and date of birth) is not rigorously enforced.

United Arab Emirates - Clyde & Co LLP
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All new mothers are entitled to:

  • up to 60 calendar days’ maternity leave with 45 days at full pay and 15 days at half pay;
  • 45 calendar days’ unpaid leave if they suffer a pregnancy-related illness; and
  • 30 days’ paid and 30 days’ unpaid leave if their child is born with a disability.

For a period of six months following the date of delivery, employees are entitled to one or two paid breaks per day amounting to a total of one hour for breastfeeding, in addition to the employee’s lunch hour. In practice, most employers provide this as one hour and permit the employee:

  • to start work an hour later or leave work an hour earlier; or
  • to have a two-hour lunch break.

All new mothers and fathers are entitled to five working days’ parental leave at full pay, to be used within six months of the birth of their child. This parental leave is in addition to the mother’s entitlement to statutory maternity leave.

Many employers in the United Arab Emirates offer enhanced maternity leave and benefits, although there is no statutory obligation to do so.

United Arab Emirates - Clyde & Co LLP
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See question 2.1.

United Arab Emirates - Clyde & Co LLP
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Trade unions are not formally recognised in the United Arab Emirates, although the UAE Labour Law contains a mechanism by which groups of employees may raise collective grievances with the UAE Ministry of Human Resources and Emiratisation (MoHRE).

United Arab Emirates - Clyde & Co LLP
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The United Arab Emirates recently issued the UAE Data Protection Law (45/2021). The law creates a framework which seeks to protect the privacy of individuals by requiring organisations – including employers – to implement appropriate governance for the management and protection of personal data.

Many features of the UAE Data Protection Law are consistent with international data protection laws. In particular, data processing is prohibited without the consent of the individual, unless an exception applies. Consent must be given in a “clear, simple, unambiguous and easily accessible manner”, and can be withdrawn by the employee.

Given that consent may be withdrawn by an employee, it is preferable for employers to rely on other available legal bases to lawfully process employees’ personal data, such as the following:

  • “necessary to protect public health”;
  • “necessary to protect the interests of the data subject”;
  • “necessary to fulfil their obligations… in the field of employment”; or
  • “necessary to perform a contract to which the data subject is a party”.

The legal bases being relied upon by an employer should ideally be set out in an employee privacy notice.

Employers that undertake background checks on new employees should also properly notify the employees of the basis on which their data will be stored and processed.

United Arab Emirates - Clyde & Co LLP
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Historically, the concept of contingent workers did not exist in the United Arab Emirates due to the rigid nature of the labour and immigration framework, which envisaged full-time employees working only for an employer which sponsored them for their UAE residence visa. However, this inflexible approach is changing.

The Executive Regulations refer to the availability of a ‘self-employment permit’ from the MoHRE, which would appear to allow individuals to engage with companies on a self-employed basis without being sponsored (and therefore employed) by that company for UAE residence visa purposes. However, at the time of writing, this permit is not readily available.

Similarly, a number of free zones in the United Arab Emirates have made freelancer permits available to individuals, allowing those individuals to undertake specific activities in the free zone without being sponsored by a particular company.

United Arab Emirates - Clyde & Co LLP
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Currently, there is no national minimum wage in the United Arab Emirates.

However, an employee must earn a minimum of AED 3,000 per month (if the employer provides accommodation) or AED 4,000 per month (if the employer does not provide accommodation) in order to be able to sponsor his or her spouse or other dependent family members for a UAE residence visa.

United Arab Emirates - Clyde & Co LLP
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The maximum normal working hours permitted by the UAE Labour Law are:

  • eight hours per day (excluding one hour for lunch); and
  • 48 hours per week (excluding one hour for lunch per day).

In addition to their normal working hours, employees are permitted to work up to two hours of overtime per day subject to a total of 144 working hours over a three-week period.

Overtime pay should be calculated as follows:

  • the employee’s basic salary, plus an uplift of 25% of the basic salary if the employee works overtime between 4:00 am and 10:00 pm; and
  • the employee’s basic salary, plus an uplift of 50% of the basic salary if the employee works overtime between 10:00 pm and 4:00 am.

If an employee works on a rest day (as stipulated in the employment contract) or on a public holiday, the employer is entitled to choose between:

  • providing the employee with a day’s holiday in lieu of the day worked; or
  • paying the employee his or her normal wage plus a 50% uplift to the basic salary for all hours worked by the employee on that day.

United Arab Emirates - Clyde & Co LLP
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An employee is entitled to the following minimum annual leave entitlements:

  • two calendar days per month for employees who have completed more than six months but less than one year of service with the employer (although most international employers in the United Arab Emirates provide employees with leave in their first year of employment, calculated on a pro rata basis according to their full annual leave entitlement); and
  • 30 calendar days per year for employees who have completed more than one year of service with the employer.

The minimum entitlement of 30 calendar days’ annual leave is generally accepted in the United Arab Emirates as equating to 22 working days (which is now the more common method of expressing an individual’s annual leave).

An employee is entitled to be paid for all his or her accrued untaken annual leave upon termination of his or her employment.

In addition to annual leave, all employees are entitled to paid leave on UAE public holidays announced by the UAE government. Where a public holiday falls on a weekend and/or an employee’s normal day of rest, there is no obligation on the employer to provide the employee with a day’s additional leave in lieu of that public holiday.

United Arab Emirates - Clyde & Co LLP
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Once a new employee has successfully completed his or her probationary period, he or she is entitled to 90 calendar days’ sick leave per year of service. The employee will be entitled to sick pay as follows:

  • full pay for the first 15 days;
  • half pay for the next 30 days; and
  • no pay for the remaining 45 days.

An employee will not be entitled to receive any sick pay if the sickness arises:

  • from the use of narcotics or alcohol; or
  • as a result of any breach by the employee of the employer’s health and safety policy.

An employer is permitted to terminate the employment of any employee who has exhausted his or her statutory sick leave and fails to return to work.

United Arab Emirates - Clyde & Co LLP
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There is no statutory retirement age under the UAE Labour Law.

United Arab Emirates - Clyde & Co LLP
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Whilst the UAE Labour Law does not specify the types of actions which are considered unlawfully discriminatory, the UAE Labour Law prohibits discrimination based on race, colour, sex, religion, national origin, social origin, or because of disability. The Labour Law further provides that female employees are entitled to receive the same wage as their male counterparts where they are performing the same work or different work of equal value.

The UAE Discrimination Law (Law No. 34/2023 on combating discrimination, hatred and extremism, as amended), further creates a number of criminal offences against discrimination, hatred and extremism, and in particular religious hatred which may have potential consequences in an employment context. It also, more generally, prohibits discrimination based on religion, belief, rite, community, sect, race, colour, ethnic origin, gender or race.

United Arab Emirates - Clyde & Co LLP
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Any rules and procedures which have the aim of enhancing the employment of UAE nationals will not be regarded as discriminatory.

Ministerial Decision 212/2018 on the Regulation of Employing Nationals in the Private Sector was introduced to control the circumstances in which UAE nationals may be dismissed.

Whilst the Decision requires employers to undertake exit interviews with UAE nationals and submit details of the interview to the UAE Ministry of Human Resources and Emiratisation (MoHRE), confirming the reasons for the dismissal, at the time of writing, the MoHRE was not enforcing such requirement.

The dismissal of a UAE national will be regarded as unlawful if:

  • the termination is not for a reason falling under the UAE Labour Law;
  • a non-UAE national is performing the same role and duties as the UAE national, or it can be evidenced that the reason for termination was to replace the UAE national with a non-UAE national;
  • the reason for termination is unrelated to the employee’s work;
  • the reason for termination is due to the UAE national filing a complaint with the UAE authorities; or
  • the employer fails to submit details of the exit interview to the MoHRE.

United Arab Emirates - Clyde & Co LLP
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See question 4.1.

Breaches of the UAE Labour Law and/or the UAE Discrimination Law can result in imprisonment and/or heavy fines of up to AED 10 million.

United Arab Emirates - Clyde & Co LLP
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A complaint of discrimination under the UAE Labour Law can be filed with the MoHRE and then progressed via the UAE courts.

Alternatively, a criminal complaint of discrimination under the Discrimination Law may be filed with the police, which will refer the matter to the public prosecutor, who will determine whether to prosecute the alleged offender in the UAE criminal courts.

United Arab Emirates - Clyde & Co LLP
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There are no specific financial remedies available to victims of discrimination under the UAE Labour Law or the UAE Discrimination Law; although it is open to a victim to pursue a civil claim for damages against an individual who has caused them harm.

United Arab Emirates - Clyde & Co LLP
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The UAE Labour Law specifically prohibits sexual harassment, bullying or any verbal, physical or mental violence against employees by an employer, the employee’s manager or any co-worker.

The UAE Labour Law further provides that if an employee raises a serious complaint to the MoHRE or files a lawsuit against the employer which is proven to be valid, and is then terminated by reason of having raised such claim, then such termination will be illegal and the employer will be required to pay compensation in the amount of up to three months’ remuneration (basic and allowances), as determined by the court.

The UAE Penal Code (31/2021) also makes sexual harassment a criminal offence.

There are no specific financial remedies available to victims of harassment, bullying or victimisation under the UAE Labour Law or the UAE Penal Code; although, as set out in question 4.5, it is open to a victim to pursue a civil claim for damages against an individual who has caused him or her harm.

United Arab Emirates - Clyde & Co LLP
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The UAE Labour Law provides that an employment contract may be terminated in any of the following circumstances:

  • if the parties agree to terminate the employment contract, provided that the employee consents to this in writing;
  • the expiry of the term of the employment contract (unless renewed);
  • by one of the parties for a ‘legitimate’ reason subject to observing the statutory notice requirements;
  • due to death of the employer (if an individual);
  • due to death or total disability of the employee;
  • the permanent closure or bankruptcy of the employer;
  • the conviction of the employee of a custodial sentence of more than three months;
  • where the employee ceases to hold the requisite authorisation to work in the UAE

Either party may terminate the contract for a ‘legitimate’ reason by serving written notice of termination which must be a minimum of thirty days and a maximum of ninety days, as contractually agreed. The Labour Law does nut define what constitutes a ‘legitimate’ reason.

An employee loses the entitlement to notice in instances where the employee is terminated ‘for cause’ (see exhaustive list under question 5.2).

United Arab Emirates - Clyde & Co LLP
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During the probationary period, an employee’s employment contract may be terminated on 14 days’ written notice. If an employee wishes to resign during the probationary period and take up employment with a new UAE employer, 30 days’ notice must be served.

After completion of an employee’s probationary period, the parties must normally give each other a minimum of 30 days’ notice to terminate the employment during the term of the employment contract.

The parties may agree a longer notice period in the employment contract up to a maximum of 90 days.

The UAE Labour Law contains a list of limited circumstances in which an employer may terminate an employee without giving any notice (‘for cause’), including the following:

  • The employee assumes a false identity or submits false documentation;
  • The employee commits an error causing material losses to the employer;
  • The employee breaches the health and safety rules of the employer;
  • The employee fails to perform his or her duties in accordance with the employment contract despite two prior written warnings;
  • The employee discloses trade secrets or intellectual property which results in losses for the employer;
  • The employee is found during working hours to be drunk or under the influence of drugs, or commits any other act against the morals of the workplace;
  • The employee commits a verbal, physical or other assault against the employer, a manager or a co-worker;
  • The employee is absent from work without lawful excuse for a period of more than seven consecutive days or 20 intermittent days in a year;
  • The employee abuses his or her position for personal gain; or
  • The employee joins another employer without complying with the relevant rules and regulations.

An employee may also terminate his or her employment without notice in circumstances where:

  • the employer commits a breach of its legal obligations to the employee; or
  • the employee is subjected to harassment or violence by the employer.

In such case the employee must report the matter to the UAE Ministry of Human Resources and Emiratisation in accordance with the UAE Labour Law.

In practice, both employer and employee must meet an extremely high threshold in order to justify termination of employment without notice.

United Arab Emirates - Clyde & Co LLP
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The concept of unfair dismissal is no longer provided for under the UAE Labour Law. However, in instances where an employee is terminated due to the successful filing of a complaint or a labour claim with the Ministry of Human Resources and Emiratisation or the UAE labour court, such termination may be ruled as unlawful, and the employer may be required to pay compensation to the employee of up to a maximum of three months’ remuneration. In determining the amount of compensation, a UAE court will have regard to:

  • the type of work the employee undertook;
  • the harm suffered by the employee; and
  • the employee’s length of service.

United Arab Emirates - Clyde & Co LLP
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Foreign employees with more than one year’s service are entitled to statutory severance pay, calculated as follows:

  • 21 days’ basic pay for each year of service for the first five years; and
  • 30 days’ basic pay for each year of service after five years.

An employee’s statutory severance pay is capped at two years’ total wage (basic pay and allowances) and should be pro-rated in respect of part-years worked.

As an alternative to statutory severance pay, employers may voluntarily opt into paying monthly contributions into a UAE licenced employee savings scheme in place of paying severance pay on termination, in line with Cabinet Resolution No. 96/2023 Concerning The Optional Alternative System To The End Of Service Gratuity System.

United Arab Emirates - Clyde & Co LLP
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To file a labour complaint, an employee must first:

  • register a complaint with the UAE Ministry of Human Resources and Emiratisation (MoHRE); or
  • if applicable, register a complaint with the authority of the free zone in which the employer is located.

The MoHRE or free zone authority will attempt to mediate the dispute and may also provide recommendations as to how the matter should be resolved.

If the matter cannot be resolved amicably, the MoHRE or free zone authority will refer the matter to the UAE Labour Court.

United Arab Emirates - Clyde & Co LLP
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The key features of UAE Labour Court proceedings are as follows:

  • All proceedings are conducted in Arabic.
  • All documents submitted to support a claim or defence must be legally translated into Arabic.
  • Only advocates who are registered with the UAE courts have rights of audience.
  • A power of attorney must be issued by a party to proceedings to his or her legal representatives and filed with the UAE Labour Court to enable the legal representatives to participate in the proceedings.
  • There is no duty of full disclosure (ie, in the absence of a court order, parties are not required to disclose documents that do not support, or otherwise undermine, their case).

The UAE Labour Courts rely heavily on the parties’ written submissions and there is very limited opportunity for oral evidence (if any).

The proceedings will be progressed through a series of hearings, during which each party submits a written memorandum with supporting evidence. Each party will be given the opportunity to reply to the other’s memorandum. Once the court is satisfied that it has a complete picture of the case, it will reserve the matter for judgment.

If the court considers that the claim or a particular issue requires further investigation or analysis, it has absolute discretion to appoint an expert to investigate any particular aspect of the case. The expert has a broad remit, which may include:

  • visiting the parties’ premises;
  • requesting certain documentation for review; and
  • interviewing party representatives.

Written submissions can also be made to the expert. The expert will then prepare a report of his or her findings, which will be submitted to the court. The parties will have the opportunity to reply to the report prior to the matter being reserved for judgment.

After the first court’s judgment, a party will have 30 days to appeal to the Court of Appeal. There may be a further opportunity to appeal to the Dubai Court of Cassation or the Federal Supreme Court.

From 1 January 2024, the MoHRE has the authority to adjudicate disputes with a value of less than AED 50,000. In addition, the MoHRE has the authority to adjudicate disputes arising from a breach of a settlement between an employer and an employee previously reached in front of the MoHRE regardless of the value of the settlement. The MoHRE’s decision has the power of an executive deed which can be executed by the winning party in accordance with the usual execution procedures.

United Arab Emirates - Clyde & Co LLP
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The UAE government is increasing the employment of Emiratis in the private sector through its programme of Emiratisation. We expect there to be increased focus on incentivising private sector companies to employ Emiratis, along with further regulation around the ongoing employment of Emiratis generally.

United Arab Emirates - Clyde & Co LLP
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Our top tips for navigating the employment regime in the United Arab Emirates are as follows:

  • UAE federal law is drafted in Arabic. Arabic does not always translate easily into English, so it is important not to place sole reliance on an English translation of the UAE Labour Law. If necessary, seek assistance from an Arabic speaker to ensure that you understand the exact meaning of a particular article or provision.
  • Have regard to local customs and cultures at all times when dealing with sensitive employment issues.
  • Do not assume that a UAE court will approach an employment dispute in a way which is remotely similar to the approach typically taken by a court in your home jurisdiction.
  • Everything agreed between an employer and an employee must be recorded clearly in writing.

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